Claims of Savings From Gutting Fuel Economy Rules Are a Lie

Gutting regulations, especially any rules that might reduce energy consumption, has been one of the top priorities of the Trump administration since returning to office in 2025, second only to expelling millions of immigrants. Federal incentives for electric vehicle purchases have already been eliminated, and the administration has said it won’t fine automakers for failing to meet fuel-efficiency targets. Now, the US Department of Transportation is about to formally roll back the Corporate Average Fuel Economy (CAFE) standards through 2031. Transportation Secretary Sean Duffy claims that reducing the CAFE standard from just over 50 mpg to 34.5 mpg will lower new-vehicle prices by $930. That claim is dubious at best, and even if automakers do cut prices, drivers will still end up paying about $650 more per year on fuel.

A Little Background on CAFE

CAFE regulations were introduced in the mid-1970s after the 1973 Arab Oil Embargo. Automakers were required to meet sales-weighted fuel economy averages across all vehicles they sold. The standard started at 18 mpg in 1978 and gradually increased to 27.5 mpg by 1990. The standards weren't increased again until 2011, following the passage of the 2007 Energy Independence and Security Act, which called for CAFE to be raised to at least 35 mpg by 2021. 

During the Obama and Biden administrations, the standard rose in five-year increments, eventually reaching 50.4 mpg by 2031. But there’s an important consideration when looking at these numbers: they don’t actually represent real-world fuel efficiency. In the 1970s, the EPA used only two test cycles to evaluate emissions and efficiency, a city cycle and a highway cycle, but neither was very representative of real-world driving and yielded wildly optimistic results. 

Over the years, new test cycles were introduced and adjustment factors were added, providing fuel economy estimates that were much more achievable. When you buy a new vehicle, these adjusted fuel economy numbers are the ones that appear on a window sticker.

CAFE calculations, however, are still based on those original city and highway test cycles. So when CAFE requires an automaker to achieve 50.4 mpg, that’s actually closer to 35 to 36 mpg in the real world and on the sticker. The 2026 Toyota Grand Highlander Hybrid is a great example: it has an unadjusted combined fuel rating of 50.5 mpg but a sticker value of 36 mpg. Similarly, the 34.5 mpg standard proposed by the Trump administration is about 25 to 26 mpg in practice. A 2026 Ford Maverick with the turbocharged 2.0-liter four-cylinder has a 35.0 mpg unadjusted rating and 26 mpg adjusted combined fuel economy on the sticker. 

What Does It Mean For Your Wallet?

Using the fuel cost calculator on FuelEconomy.gov, a typical American driver covering 15,000 miles a year at the current $4.10 average for regular gas would pay $2,350 annually in the Maverick, versus just $1,700 in the Grand Highlander Hybrid, a savings of $650 each year. Even if vehicle prices did drop by the claimed $930, a driver will have already spent more than that at the pump within 18 months, and would keep paying it every year after.

That’s a very short-sighted and foolish trade-off. It’s also one that customers probably won't get to make anyway. There’s a lot more driving up transportation costs than just efficiency. Tariffs imposed by the administration are adding thousands of dollars to the cost of building new vehicles, more than fuel-efficiency rules ever did. It’s a sure bet that just gutting CAFE won’t reduce the cost of new vehicles. 

What the Grand Highlander Hybrid proves is that a large three-row SUV, exactly the type of vehicle Americans are fond of buying, can meet the 50 mpg CAFE threshold. It doesn’t even require going electric. The Biden administration never formally mandated EV production, but automakers almost certainly would have needed some proportion of EVs in their lineups to keep selling vehicles like the gas-guzzling 12 mpg Ram 1500 TRX. But it certainly wouldn’t have been 100% electric. 

Unfortunately, politicians rarely tell us the whole story, which is often nuanced. It takes more effort to explain, and people are often too lazy to think about it. But the bottom line is that simply gutting fuel-efficiency regulations won’t make transportation more affordable. That’s a far more complex problem to solve. Drivers who choose more efficient vehicles, including EVs, when it makes sense for them, will save far more money than any headline from a political hack would have you believe.